'A lot of thirsty people over there': Australia shipping 234 million bottles of wine a year to China

Chester Osborn has been selling wine in China for about 20 years but in the last year sales have soared 300 per cent.

Osborn's family winery d'Arenberg exports about $4 million worth of wine a year into the country from its winery based in South Australia's McLaren Vale.

d'Arenberg, which turns over more than $40 million a year, joins a growing number of Australian wineries selling to China with export value hitting $1.05 billion earlier this year.

Chester Osborn is the chief executive of d'Arenberg which exports to China.

Wine Australia's figures show these sales were based on 19.5 million 9 litre cases - a 9 litre case is the measurement unit generally used in the industry and is the equivalent of 12 750ml bottles of wine, putting Australia's exports to China last year at 234 million bottles of wine.

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Exports to China were equal in value to Australia’s next three most significant markets combined: $424 million to the United States, $384 million to the United Kingdom and $199 million to Canada.

"There are a lot of thirsty people over there and Australia makes a lifestyle they really quite enjoy," Osborn says. "We are actively working the market and doing a lot of tastings and dinners there. It's a huge market and there are a lot of premium buyers out there."

Strong end market

A Morgan Stanley report published last month highlighted the strong market in China for Australian wine exports.

The report focused on wine giant Treasury Wine Estates and found Australian export growth to China slowed in the September quarter to $949 million but Morgan Stanley said the drop appeared to be only temporary and reflected specific issues including stricter border controls.

"The earlier Chinese New Year should drive an acceleration in December exports growth," the report found.

Low prices

The report found an increasing number of Australian wineries are exporting to China but when broken down by value the amount of more expensive wines being exported to China was still relatively small.

Australia shipped $71 million worth of wine last year priced at less than $2.49 a litre and more than $231 million worth of wine priced at $2.50 to $4.99 a litre, making it the most popular price point for Australian wine.

The wine exported by d'Arenberg to China is at the premium end of the market but Osborn is not surprised at the low price point of a lot of Australian wine exported to China.

"There always is, that's just normal, you look at any country in the world the average price is really quite low as most peoples income is," he says. "There are only 48 million Chinese drinking wine right now which is amazing because they drink quite a bit but there are 1.8 billion people there so the potential is huge."

Chris Pfeiffer of Pfeiffer Wines in Rutherglen.

Hands in the way

Winemaker Chris Pfeiffer has been exporting wine from his Rutherglen winery Pfeiffer Wines to China since 2002 but says demand fluctuates from year to year.

Some years Pfeiffer Wines exports up to three containers of wine with a value of around $250,000 and other years it is only half a container.

Pfeiffer says in a good year, exports to China makes up to 4 per cent of Pfeiffer Wines turnover of more than $20 million.

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"From a small producers perspective it is not easy," Pfeiffer says. "I find China an extraordinarily difficult region to understand."

Pfeiffer says there are plenty of opportunity for Australian winemakers in China but it is hard for small wineries to crack the market.

"There are a lot of people in China but how many of those have a lot of money is another question," he says. "Wine from a small winery is not cheap, a bottle from us sells for about $50 there but here it goes for $20. There seems to be a lot of hands in the way with people taking their cut going through."